A consortium of U.S. and Saudi companies is set to build a new refinery in the Persian Gulf despite the current situation in the region. The facility will have a price tag of $5 billion and a capacity of 200,000 barrels of crude oil daily, Reuters has reported.
The consortium, dubbed MERA Oil, includes Texas-based MWG Group, the Patel Family Office, and PWS, a company associated with Saudi AHQ Group. The partners are currently selecting the site of the new facility, with a short list of three possible locations from the Gulf Cooperation Council. The GCC is comprised of six Gulf states.
Besides a refinery, the project will also feature a deepwater port, storage capacity, and export facilities, the report said. The location will be outside the Strait of Hormuz, the consortium said.
At a future date, the complex may add sustainable aviation fuel processing capacity and carbon management facilities, Reuters also said in its report.
Earlier this week, Saudi Aramco had to shut down its Jazan refinery, removing 400,000 barrels daily from global refining capacity, following a strike by the Yemeni Houthis. The attack took place Saturday, and video verified by Reuters showed a large plume of smoke rising from the refinery. Houthi military spokesman Yahya Saree said the group also struck Aramco facilities in Yanbu. Saudi Aramco has not commented on the damage or restart schedule. Per media reports, repairs at Jazan will take until mid-August.
The shutdown will aggravate an already rather severe supply situation in refined fuels, which analysts have been warning about for months but only began to bite in the past couple of weeks, as crack spreads soared to an all-time high due to the gap between demand for fuels and their supply amid fighting in the Persian Gulf, the Red Sea, and Russia. On the good news side, Russia has begun restarting refineries damaged by Ukrainian drone strikes. On the bad news side, its ban on diesel exports is still in place.
By Irina Slav for Oilprice.com
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